Chapter 5

Question 1

Cash and other assets which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business for one year whichever is longer.

Answer 1

Current assets

Question 2

Cash, short term investments, receivables, inventory, prepaid expenses

Answer 2

Current assets

Question 3

Property used to earn rental income or capital appreciation or both.

Answer 3

Investment property

Question 4

Generally securities issued by other companies that are expected to be held for more than one year.

Answer 4

Investments and funds

Question 5

Tangible, long-lived assets. For example land, buildings, machinery, furniture, fixtures, related to accumulated depreciation, natural resources, and related accumulation.

Answer 5

Property, plant, and equipment

Question 6

Assets lacking physical substance, such as patents or trademarks.

Answer 6

Intangible assets

Question 7

Short-term obligations, such as accounts payable, wages payable, unearned revenues, or accrued liabilities, that are expected to be settled in the near future, typically one year or less.

Answer 7

Current liabilities

Question 8

Long-term debt, long-term accruals, deferred income tax liabilities, notes payable, bonds payable, discontinued operations liabilities.

Answer 8

Long-term liabilities

Question 9

Contributed capital, retained earnings, accumulated other comprehensive income, treasury stock, noncontrolling interest.

Answer 9

Owners equity

Question 10

The amount owed to stockholders for company profits that were reinvested in the business instead of distributed as dividends

Answer 10

Retained earnings

Question 11

Future value and is owned or controlled by the firm

Answer 11

Asset

Question 12

Obligation to provide goods or services resulting from past events

Answer 12

Liability

Question 13

Current assets/current liabilities

Answer 13

Current ratio

Question 14

Total liabilities/ total assets

Answer 14

Debt ratio

Question 15

The ability to purchase or sell an asset quickly and easily at a price close to fair market value. The ability to make short-term obligations using assets that are the most readily converted into cash

Answer 15

Liquidity

Question 16

Obligations that broadly represent a probable sacrifice of economic benefits in periods generally greater than one year in the future

Answer 16

Non-current liabilities

Question 17

The difference between current assets and currently liabilities

Answer 17

Working capital

Question 18

A balance sheet organized so as to group together the various assets and liabilities into subcategories

Answer 18

Classified balance sheet

Question 19

The historical cost of an asset, adjusted for amortization and impairment

Answer 19

Amoritised cost

Question 20

Amounts owed by business to creditors as a result of borrowing that are evidenced by loan agreements

Answer 20

Notes payable

Question 21

A financial instrument is a value that depends on the value of some underlying asset or factor

Answer 21

Derivatives

Question 22

With respect to financial statement analysis, the ability of a company to fulfill its long term obligations.

Answer 22

Solvency

Question 23

The mix of debt and equity that a company uses to finance a business; a company specific mixture of long-term financing

Answer 23

Capital structure

Question 24

A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit

Answer 24

Deferred tax liabilities

Question 25

The balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit

Answer 25

Deferred tax asset

Question 26

A liability account for money that has been collected for goods or services that have not yet been delivered; payment received an advance of providing a good or service

Answer 26

Deferred income